Wake up--you can't smell the coffee

A decade ago, when airports, colleges and other facilities were junking their no-name feeding operations for satellites of the big streetside chains, Starbucks was notoriously picky about whose calls it’d return. All the institutions wanted the hot (and then seemingly shiny-new) brand. Yet Starbucks wouldn’t consider a location if it required one stirrer to be out of its usual place. Plenty of would-be partners shook their heads in disbelief that the upstart would walk away from captive A++ sites for the sake of absolute concept integrity. But more than a few confided their admiration for a fast-growth company that would preserve its character with that sort of zeal.

Those days come to mind as the blogosphere dissects the memo that was intercepted last week from Starbucks conscience Howard Schultz to current chief executive Jim Donald. According to the version posted at http://www.starbucksgossip.com, Schultz doesn’t like the smell of today’s Starbucks—or, more precisely, the lack thereof.

In measured prose that suggests a passion running toward anguish, Schultz argues that Starbucks is sacrificing too much of its personality for the sake of growth, right down to the coffee aroma that once served as a halo. As the chain expanded further and further from its Seattle roots, its coffee had to be carefully preserved in transit, and that meant “flavor locked packaging,” Schultz writes, apparently referring to sealed transport containers. The freshness of the ground coffee was maintained, “but at what cost?” His answer: “The loss of aroma—perhaps the most powerful non-verbal signal we had in our stores.”

With fresh, bagged coffee now being shipped into stores, the concept no longer needs “our people scooping fresh coffee from the bins and grinding it fresh in front of the customer,” costing the brand “tradition and our heritage,” he asserts.

Similarly, he tells Donald, the stores have lost their “soul” and become “cookie cutter” and “sterile,” the results of efforts by the company to boost returns with more efficient, templated designs.

Schultz even laments the height of the automated espresso makers that Starbucks now uses. He doesn’t revisit the internal debate that raged over the switch to those machines, which led the chain away from its early insistence that a barista make each espresso base for a drink. The new equipment serves up drinks more quickly, but with the loss of the showmanship and sent of craft that set Starbucks apart.

Instead of reopening that discussion, Schultz notes that more “romance and theatre” was lost to the machines because of their height. Customers can no longer easily watch their drinks being made, which tempers “the intimate relationship with the barista.”

“Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience,” Schultz says. “But in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces.”

As a result, he asserts, the chain is losing “trial and loyalty” to “fast food operators and mom and pops.

“This must be eradicated,” he declares.

At this stage of the game, Schultz has enough money to make Bill Gates hesitate if both were reaching for the lunch check. The fact that he’s still trying to preserve the uniqueness of his brand seems to have less to do with money than with the pride that drove industry elders like Dave Thomas, Ray Kroc and J.W. Marriott. Wealth? Great. That kind of passion? Beyond dollars and cents.

The memo is extraordinary, for a lot of reasons. It provides a glimpse at the inner workings of a brand with an image strong enough to cast shadows. But, perhaps more important, it captures why Starbucks was so different, and why Schultz was successful—the emphasis on personality and distinction, instead of returns, returns, returns and returns. It’s a powerful lesson for the steward of any chain whose shareholders are constantly pointing out that a quarter has only 13 weeks to it.